Semiconductor sales rise 9.4 percent despite price cuts

Dropping CPU prices did not hinder second quarter worldwide semiconductor sales, which rose 9.4 percent from last year to hit US$58.9 billion

Despite plunging prices for CPUs, worldwide semiconductor sales rose 9.4 percent from last year, reaching US$58.9 billion for the second quarter.

The industry struggled as chip makers like Intel and Advanced Micro Devices (AMD) slashed prices on their chips, helping to drive the average price of a laptop down by 18 percent compared to the second quarter of 2005, according to figures released Thursday by the Semiconductor Industry Association (SIA).

That global trend was mirrored in the U.S. where the average price for retail notebook PCs dropped from US$1,141 in the second quarter of 2005 to US$938 a year later, according to Current Analysis.

The price slump was offset by a rise in the total number of PCs sold, SIA said. Vendors sold 54.9 million desktops, notebooks and servers during the second quarter, a rise of 11 percent over last year, according to industry numbers compiled by Gartner.

Another saving grace for quarterly semiconductor sales was robust demand for cell phones, SIA President George Scalise said in a release. Vendors sold 235 million cell phones during the second quarter, and expect an increase of 4 percent in the third quarter and 10 percent in the fourth quarter. That would push the total number of cell phones sold in 2006 to nearly 1 billion, he said.

For June, the Asia Pacific region had the fastest rise in semiconductor sales, which increased 12.8 percent year over year to US$9.2 billion, accounting for nearly half of total industry revenues. Worldwide semiconductor sales were US$19.6 billion for June.

The slowest growth happened in Europe, where sales rose only 1.4 percent to US$3.1 billion for the month.

The European market was dragged down by a sharp decline in sales of microprocessors, according to a report Thursday from the European Semiconductor Industry Association. The high points of the European market were flash memory, DRAM (dynamic RAM) and automotive and communications semiconductors.

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